The Pradhan Mantri Mudra Yojana (PMMY) was launched in April 2015 to provide loans to micro and small enterprises in the non farm sector. The loans are given by banks, regional rural banks, small finance banks, NBFCs and microfinance institutions. MUDRA (Micro Units Development and Refinance Agency) refinances these lenders.
Loan categories
- Shishu: loans up to Rs 50,000
- Kishore: loans above Rs 50,000 and up to Rs 5 lakh
- Tarun: loans above Rs 5 lakh and up to Rs 10 lakh
- Tarun Plus: loans above Rs 10 lakh and up to Rs 20 lakh, for those who have taken and repaid a Tarun loan. This was announced in the Union Budget 2024-25.
What the loan can be used for
Income generating activities in manufacturing, trading and services, including activities allied to agriculture such as poultry, dairy and beekeeping. Examples include small shops, tailoring units, beauty parlours, repair workshops, food processing units, transport vehicles for business, and street vendors.
Key features
- No collateral is required. Loans are covered under the Credit Guarantee Fund for Micro Units.
- Interest rates are set by lenders under RBI guidelines.
- Loans can be term loans or working capital, including an overdraft facility.
- A Mudra card, a RuPay debit card, may be issued for working capital needs.
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Who can apply
Any Indian citizen with a business plan for a non farm income generating activity, with loan needs within the limits above. Existing businesses and new start ups can both apply. The applicant should not be a defaulter with any bank.
Documents
- Identity and address proof
- Photographs
- Business plan or project report
- Quotation for machinery or items to be bought
- Proof of business identity and address, if existing
- Caste certificate, if applicable, for special schemes
How to apply
- Visit a bank branch or other lender and ask for a Mudra loan form.
- Or apply online through the Jan Samarth portal or the lender’s website.
- Submit the business plan and documents.
- The lender assesses the proposal and sanctions the loan.
Beware of agents
There are no agents or middlemen appointed by MUDRA. Do not pay anyone a fee to “get” a Mudra loan. Report such frauds to the bank or police.
Bottom line
A Mudra loan can help small businesses start or grow without collateral. Prepare a clear business plan and apply directly with a bank or on Jan Samarth.
Source / स्रोत: MUDRA, Jan Samarth portal, Department of Financial Services
